Virginia
In Virginia, revenue-based financing emerged as a favored choice for businesses seeking funding. To safeguard the interests of businesses and consumers, the State Corporation Commission introduced new regulations that financing providers and brokers had to comply with. These regulations, effective for sales-based financing contracts or agreements entered on or after July 1, 2022, aimed to establish transparency, fairness, and accountability within the financing industry.
In adherence to the new regulations, any provider or broker offering revenue-based financing had to register with the State Corporation Commission, following established procedures. The registration process commenced by November 1, 2022, and required annual updates thereafter. Additionally, financing providers had to furnish comprehensive disclosures to recipients while extending specific financing offers. These disclosures aimed to offer clear and comprehensive information about the financing’s terms and conditions, including interest rates, fees, and repayment obligations. The goal was to empower recipients to make informed decisions about accepting the financing offers.
Virginia Disclosure FAQ
A broker must not refer any Virginia Merchant to a funder unless the broker is registered with the Virginia Bureau of Financial Institutions as a “Sales-based financing broker”
The broker must ensure that the Virginia Merchant signs and dates both the contract and Virginia Disclosure.
